 "Smart Parts" E-Newsletter
September 2010 |
"Is Your House In Order?" | |
"Smart Parts" with Dave Piecuch, ACG Inc.
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Issue 4-September
-2010 |
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| Hello "Smart Parts" Readers!
Fall is fast approaching as we close in on the third quarter of 2010. Our "Smart Parts" team of Parts Managers AND Dealers is growing at a rapid pace! Many Parts Managers and Dealers have already benefited from our "Smart Parts" content and questions submitted to our "Ask Dave" section of the E-Newsletter.
Our FREE Monthly "Take-Aways" have also been a big hit! If you have just joined our "Smart Parts" Team and haven't received your FREE "Take Aways", simply visit our website at SMARTPARTSEZINE to request this month's as well as past issues. Just enter "Past Issues" in the comment box. Remember, sign up is FREE, so don't miss your opportunity to access these helpful tools that can increase your inventory profitability and performance!
In this issue, we will be focusing on Source Ranking your inventory. Often times, our parts sources are set up by the manufacturer in our DMS systems. Manufacturers' often set up our parts sources by catagories such as filters, brakes, accessories, etc which can in itself lead us to unbalanced inventories.
In this issue, our "Tip of the Month" will highlight Source Ranking & Days Supply. We will provide helpful hints as well as our FREE Monthly "Take Away" on how to stock the right amount of parts when you need them most and not to overstock items that may eventually lead to obsolescence.
Is YOUR House in Order!...Let's read on and find out!
If you are not a member of our Smart Parts E-Newsletter, sign up today at smartpartsezine and receive this month's FREE "Take-Away"!!...ACG Smart Parts "Cost Plus Calculator"! Already a member?...visit our website at smartpartsmembers for your free copy today!
Sincerely,
Dave Piecuch
Vice-President
Automotive Consultants Group Inc.
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"Smart Parts" Tip Of The Month | |
Is your "House" in order? Do you have all the right parts in the right parts sources? How can we maximize our Days Supply by utilizing Source Ranking? Are your parts sources "Ranked" by piece sales or by "Parts Catagory" set up by the manufacturer?
Picture this if you will, let's say a "House" represents our parts inventory and in our "House" there are many rooms. Now, our house contains many items, but each room contains items specifically used in that room. Let's call each of these rooms "parts sources", in other words, within my whole parts inventory, (our house) we have several rooms, (parts sources). Each of these items in our parts sources have different activity cycles, just like the rooms in our house.
Let's call the kitchen our "fast-moving" parts source which requires a lot more maintenance and restocking the refrigerator with food, or in this case in point...Parts! Other rooms, or "parts sources" may have less activity which require LESS restocking although BOTH will impact our Days Supply. Fast moving parts require LESS Days Supply versus a HIGHER Days Supply on items that have less activity.
So, why would we have our parts sources set up to reflect a specific catagory instead of sales movement? Let's say that I have a parts source set up for filters....Now, it's quite possible that within that source I could have filters that sell 100+ times a year and filters that sell maybe just a couple times a year. The problem is that the Days Supply is set up the same for both because they are in the same source, which results in running out of the one that sells 100+ times a year while being overstocked on the one that sells just a couple times a year!
Source Ranking our parts inventory MATCHES sales movement with the proper number of Days Supply and is available with most DMS vendors and may be labelled as "ABC Source Ranking" . Parts in these sources are suggested for restocking based on their sales movement. For example; if a part sells 100+ times a year, I would only need approximately 8 Days Supply because this part is reordered often, especially with most manufacturers providing Daily Stock Order. Now, on the other hand, if a part only sells 6 times a year, I would need a 60 Days Supply of that part because it's only selling approximately every 60 days!
The bottom line is if we want to maximize our inventory dollars, Source Ranking our parts inventory is the most efficient way to prevent "running out of a stocking item" AND reducing my overstock quantities. Source Ranking is quite similar to stocking our new and used vehicle inventories. Would it make much sense to stock the same number of vehicle models regardless of how they sell? Absolutely not!!
This month's FREE "Take Away" will help you get on the road to Source Ranking by Piece Sales. Our "Source Ranking Guide & Days Supply Calculator" provides "Low & High Days Supply" Set Ups for each increment of sales from 2 piece sales per year to 100+ piece sales per year. The Days Supply Calculator will help you determine YOUR Days Supply based on Lead Times, Stock Order Number of Days, etc. Your DMS provider can help you get the program set up initially or just contact us at www.smartpartstraining.com
So!....Get YOUR house in order with our September FREE "Take-Away"! Our ACG Smart Parts "Source Ranking & Days Supply Calculator" is available by signing up to our SmartPartsEzine today. Already a member?....visit our website at smartpartsmembers for your FREE copy!
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"Ask Dave" | |
Kevin Rutherford of Steve Marshall Ford in Nanaimo, BC, Canada Asks:
"Dave, my current Stock Order Performance is at 47%. How can I achieve NADA's Guideline of 75% when I am on a Weekly Stock Order instead of a Daily Stock Order here in British Columbia, Canada"?
I can understand your concern, Kevin, especially with all the enhacements that manufacturers' have made in reducing "Lead Times" as well as increased "Fill Rates" from local PDC's the last several years. Unfortunately, in your case, you are not able to take advantage, but it doesn't necessarily mean that these guidelines are not achievable. In some respects, you may have an advantage! Let me explain!!!
As you know, many manufacturers' began offering a "Daily Stock Order" option, in many cases, even offering Supplemental Stock Order Programs generated by the manufacturer which would eliminate the need for Parts Managers' to generate their own Suggested Stock Order with in-house DMS Systems. Many dealer parts managers' have taken advantage of these enhancements for the wrong reasons. In other words, they have utilized this option to stock less parts and order "overnight" Special Orders to fill the demand, letting the manufacturer handle regular Stock Orders. Unfortunately, this has caused Service Managers' nightmares waiting for parts that extra day when it should have been on the shelf in the first place.
The problem I have with all this innovation is that we have become less dependant on what our own stocking needs are versus what the manufacturer suggest we stock. Even though I believe these programs are a great "enhancement", we still need to fill the needs of our own customers with data generated in our own DMS Systems. In your case, Kevin...it's all you! You still have overall control with only one option....provide the "Right Parts the FIRST Time"!
In your specific case, Phase-In Parameters and Days Supply are the two key issues...Lead Times, Days to Review your Stock Order, Number of Days Between Stock Orders need to be adjusted to reflect being on a Weekly Stock Order. All of which will help you achieve the correct "Days Supply" and increased Stock Order Performance.
"Ask Dave" Subnote:
The above question was submitted to me over 60 days ago. Kevin Rutherford from Steve Marshall Ford in Nanaimo, BC, Canada enrolled in our "Smart Parts" Program in May of this year. He sent me this email last week:
Dave,
"Every day at 3:00 pm I print a "Stock Out" list so we can catch any fast-moving parts that may have sold out so I can have them added to my Supplemental Stock Order the next day. It's not the most cost effective way to order stock parts, but it's better than getting caught short of something I should never be out of!
On an average day we may order 4 to 6 part numbers and sometimes as many as 8 or 10! (I'm embarrassed to say!)
Today we had NONE!...and I'm not embarassed to tell you that I nearly cried! That's never happened! Could it be that our recent "Smart Parts" changes be starting to take affect?
Thank You Dave for all your direction and persistence with my continuous calls and emails. I know that this is a small step, but it left me with grin on my face for the rest of the day!"
Kevin Rutherford, Parts Manager
Steve Marshall Ford
Nanaimo, BC, Canada B7244
(250) 758 - 7741
Thanks for your question, Kevin and Thanks for choosing "Smart Parts"!...Don't forget to send in YOUR question in to: Ask Dave! at www.smartpartstraining.com for a chance to win YOUR FREE 60 Minute webinar with Dave! |
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Got "Service" Absorption? |
For more information on ways YOU can increase YOUR "Service Absorption"....visit our website at: www.smartservicetraining.com
and see how ACG can help you make
"This Year Your BEST Year Ever!"
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